The first pawnshop in the world appeared in America in 1949, where the local owner of the workshop opened an unusual business: he began to offer loans secured by cars left by the owners in the parking lot. Soon the idea became widespread, and business became profitable. It is a kind of bank online for US citizens. In the 50s the States were in its period of prosperity: industry, including the automobile industry, began to develop at a tremendous pace, and the consumption mania seized the country when it wanted to buy new things and products, and there was not enough income. A car, one or two, was in almost every family, so the temptation to quickly get the right loan amount was great. Pawnshops quickly gained popularity. Even if the car owner could not repay the debt on time, the number of people who wanted to buy a car was huge.
By 1960, there were over a thousand licensed pawnshops in the territory of America; in parallel, underground workers successfully worked. Initially, pawnshops existed as an additional type of business, along with, for example, a gas station or laundry. Only when the popularity of such credit companies went far beyond the United States, business took its leading place.
Today, there are about 17,000 auto pawnshops in America and they work according to the rules determined by local legislation. For example, after taking a car as a security, the lender must report the information about its owner to the police, which is not required in many other countries. Also, almost all organizations have established the so-called grace period: 10-90 days.
How to apply for an auto loan?
Unscrupulous auto pawnshops can force a client to sign a car purchase and sale agreement and remove the signing of a contract on video. In addition to the “purchase” additional agreement is signed on the right to repurchase a car. As a rule, the majority of borrowers in difficult financial situations agree to sign these documents.
Legal pawnshops operate according to another scheme, which implies the signing of a loan agreement and a car security, followed by registration of the latter in the registry of movable property liens. This is a safer way for the borrower.
Application on the site of the pawnshop
This is the first stage of customer cooperation with the pawnshop. Based on the information specified in the application form, the company’s specialists conduct a preliminary assessment of the car and determine the loan size.
The next step is to visit the office. Here the car is evaluated finally, after which a loan agreement is signed. It’s up to you to get cash.
Such an approach makes it possible to understand the main advantage of the pawnshop – the speed of taking a loan. But this is not the only advantage regarding a bank loan for citizens. Pawnshops do not estimate the user’s credit history, which in some cases can become an obstacle to being approved for a loan. The interest on the loan is not much higher than the bank and is not comparable with the conditions that offer MFIs. The formalization of the contract in the framework of the current legislation avoids a number of problems that arise when getting a loan in other ways.